George W. Bush Didn’t Know Some Things

Hardly news, yes. And hardly surprising that one of the things he didn’t know was what a TED spread is. But he overcame his natural hostility to those who do know such things, and elevated a genial, bearded, middle-aged man named Ben Bernanke to help.

When he first picked Mr. Bernanke to serve as a member of the Fed’s Board of Governors in 2002, Mr. Bush noted his selection “wasn’t from the political class that was my strongest supporters, and that was professors.”

Mr. Bush said one of the most important qualities of presidential leadership is being able to “recognize what you don’t know” and take advice from experts….

Mr. Bush also acknowledged some of the exotic issues he found himself confronted by at the start of the financial crisis. He related a time when he was advised of dire messages emerging from the TED spread. For market participants, this metric tracks the difference between Treasury bills and the London interbank offering rate and is a gauge of market tumult and dislocation.

Mr. Bush laughed that he told this unnamed adviser “I don’t even know what the TED spread is!”

'Mr Geithner was known for his brutal candour, and as an author, he does not disappoint. At one meeting he realised that John Thain, Merrill Lynch’s chief, did not know the name of his chief risk officer who was sitting next to him. It was, he writes, “an awkward moment”, and explained the sorry state of Merrill’s risk management. Mr Geithner also takes the opportunity to respond to his many naysayers. He describes Neil Barofsky, the self-styled crusading inspector-general of the Treasury’s bail-out programme, as being “untainted by financial knowledge or experience…outraged by every programme, uninterested in context.”'

The more frequently you monitor your portfolio, the more likely you are to observe a loss. This is likely to cause short-sighted decisions and could hurt your investment performance. If you are checking your portfolio more than once per quarter, you’re doing it too much.